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During my travels, I have spoken with a number of East Coast business leaders who were evaluating online services to integrate into their companies. Listening to their complaints around previous products they had used, I quickly realized that Silicon Valley has become completely out of touch with its customers — and yes, that includes enterprise customers. Surprising, but true. Although we are iterating and building faster than ever, we have seemingly forgotten about the last “S” in SaaS — the “Service” in Software as a Service.

Tech companies in the Valley have become chiefly concerned with wringing out costs and, importantly, impressing their investors by demonstrating business momentum and growth of user numbers. In doing so, many companies have opted to run their customers through a low-touch, self-service experience. Certain human aspects of relationship are quickly being abandoned, just as it is with the use of texting and Snapchat to stay connected. Communication these days requires very little face-to-face time. However, this depersonalization does not work for companies and the enterprise, though many SaaS companies are reducing contact and service when they should be increasing it. The Valley has forgotten that a great user experience extends beyond the product, and delighting customers with a total user experience is at the heart of long-term sustainable business.

So how did we get here, and what’s the alternative? Let’s break it down:

How Software Ate Service

As we took our first baby steps toward going paperless, we learned quickly that we could build and use all kinds of services on the Web, from online banking and stock trading, to purchasing airline tickets and hotel rooms. Meanwhile, a new ability to contribute content and engage with other Web users led us to become social. It changed the landscape of the Web, and companies were quick to jump on the social bandwagon. The downside of these simultaneous shifts is that it caused people to become less connected and less intimate, as software companies realized that they could deliver software from behind their computer screens via the Web.

Companies started to focus their attention on cutting operating expenses with the goal of maximizing margins. A whole new era of Web tools for customer interaction came alive. Service platforms like Zendesk started popping up, and companies placed big investments in automating the customer experience. In fact, “automation” from marketing to sales to support is a higher order bit for every SaaS company. But these investments have inserted a larger barrier between themselves and their customers. Upset customers are now met with automated emails and tweets from a service platform that are supposed to calm them down and boost regard for the company. I can’t say that a vague email with my name filled into a blank space ever made me feel like a special and valued customer.

For some reason, this form of computer-generated communication was okay with Silicon Valley. Perhaps it was because it became the norm and tech companies felt they needed to stay as lean as possible while adapting to changing times. Or we were oblivious to the larger impact it would have on relationships outside our tech centered lives here in Silicon Valley.

How SaaS Is Seen Outside the Bubble

Outside of the Valley bubble, a very different market exists, with frustrated customers who hate what SaaS has done to their providers. Instead of taking pride in their company and showing appreciation for each customer, service agents are installed as a churn defense strategy. In fact, every SaaS company employs this kind of strategy so as to minimize the cancerous effects of customer turnover. Automating customer service is reactionary and the churn defense strategy is causing companies to invest in more avatars, more help desk platforms that integrate with social media and more internal customer success managers. But customers feel abandoned, and they’ve given it a name — “cloud-i-fied” — a term that they use outside of Silicon Valley to describe what happens when a provider’s lackadaisical approach to service says to them, “Hey customer: Deal with my service avatar and please don’t churn, because my investors hate churn and it kills my SaaS model.”

It has come to the point where live customer visits is the surprise and delight feature that makes other SaaS companies stand out. A great example of this is a line from a Discover Card commercial from earlier this year that reads, “Some companies just don’t appreciate the power of real conversation.” Real human interaction seems to be the new sacrilege in SaaS.

Where to Go From Here? SaaS 2.0…

I believe we need to learn from the past and bring life back to SaaS by using technology to help us drive down costs and create more fluid transactions, while at the same time using it to reengage with a higher level of service for our customers. Treat them right. Make them feel special again. Win them over.

Companies that create a concierge-like experience are standouts in the customer experience realm. Great examples of these are Uber, Lyft, and Virgin America. When you need a ride, an Uber or a Lyft driver is just a click away on your smartphone to take you where you want to go. Uber makes you feel important when they arrive at your door in a sleek black car, whereas Lyft makes you feel like you’re riding with a friend as the company prides itself on its fun and outgoing drivers. Both services allow you to rate your driver after the ride, an important feature that displays real-time company accountability and value of customer experience. A few feel that services like Uber are too expensive, but people are willing to pay that little bit extra to feel like they are being taken care of. Would you rather ride in a yellow cab that has a $50 vomit clean-up fee (as I saw in a NYC cab) or spend an extra $2 (if that) and take Lyft?

This is a wakeup call for SaaS companies that want to do business beyond Silicon Valley. They shouldn’t underestimate the value of actually going to see the customer and shaking their hand, walking in their shoes, meeting their employees or buying them lunch. The market is fatigued with poor service and the companies that can communicate and build relationships effectively will be the ones that maintain stronger customer retention and ultimately raise their bottom line.

There’s a hole in SaaS that we need to address. Help us out, and don’t be a SaaS-hole.

Jeff Cavins is the CEO of visual collaboration company FuzeBox. Follow him on Twitter @jeffreycavins.

Not that this changes anything about how SideCar operates; after being sent a cease-and-desist order and fined $20,000, the company kept its drivers on the road and its mobile apps in riders’ hands.

The CPUC had previously made agreements with Lyft and Uber in January.

SideCar CEO Sunil Paul said the negotiations for his particular company took so long because he got the CPUC to agree to two particular concessions: 1) It cannot obtain driver and rider information without a subpoena, and 2) it agrees that SideCar is an information service, not a transportation service.

Update: The press office of the CPUC provided the text of the agreement, and it is embedded below.

Paul said he did not know the terms of the Lyft and Uber agreements, but that the standard terms did not include these privacy and jurisdiction claims. He said the past few months had been spent negotiating on these principles, and an agreement came through last night.

In Paul’s view, SideCar is significantly different from the competition because it requires riders to input their intended destination in order to find a driver. He calls this “ride matching” instead of “ride sharing,” and says his competitors are instead offering dispatching services, like traditional taxicab companies.

“We like the analogy of Match.com versus arranged marriage,” Paul said. “We are a data and not a transportation service.”

SideCar operates in about 10 cities, including San Francisco (where it started and is based) and Los Angeles. It has run into problems in other cities such as Philadelphia, where authorities conducted a sting, and Austin, where the city council is voting next month on whether it’s legal. In the meantime, the service operates for free in Austin and Philadelphia, while paying drivers out of its own pocket.

Lyft, the closest competitor to SideCar, announced yesterday it had raised $60 million led by Andreessen Horowitz. Will SideCar try to match that? “We’re talking to investors,” Paul said.

Meanwhile, while Lyft drivers famously adorn their cars with giant fuzzy pink mustaches, SideCar last week started handing out branded sleeves for its drivers to put on their rear-view mirrors so that passengers can more easily find their rides. “We call them ‘mirror socks,’ or ‘mox’ for short,” Paul said.

SED SC Term Sheet May23 13 Final Signed

It’s a huge round for the company, which is much loved for its community spirit and pink “carstaches,” but has also been much questioned for its practice of having regular people essentially act as city taxicab drivers in their own cars.

The deal was a speedy one; it was negotiated over the course of the past week, said Lyft co-founder and president John Zimmer.

And it brings Lyft to $83 million in total funding, having just raised a round about six months ago.

Why so much money so fast? It’s to try to get Lyft to the next level, given the expansion, competition and regulatory challenges it faces. “We can scale globally in the next 12 months,” said Zimmer.

For those paying close attention, Lyft was formerly known as Zimride, and it continues to operate a long-distance ride-sharing service under that brand, but it changed its name a month ago to reflect the momentum of the Lyft business, which is a year old.

Andreessen Horowitz partner Scott Weiss, who led the investment, contended that Lyft differs from competitors like SideCar and Uber, which are both based in San Francisco as well and have been expanding nationally. He likes that Lyft’s mission is around “taking cars off the road,” not replacing or augmenting existing systems.

Weiss said Andreessen Horowitz was motivated to swoop in and make a deal because Lyft “looked and smelled so much like Airbnb.”

Weiss noted that he’d been following Lyft closely, and saw the service grow from 14,000 rides per week two months ago (mostly in San Francisco, but expanding in other newer cities like Los Angeles and Chicago) to 30,000 rides per week now. Plus, he said, more than half of the company’s passengers are women, which says something about safety.

“With the risk of the Samwer brothers [who infamously replicate consumer Internet businesses for the European market] and the copycats, you can’t let grass grow under your feet,” Weiss said. “You have to grow it as quickly as you can, and that’s where we come in.”

The company connects riders and drivers through its smartphone apps, with payment in “gifts” rather than fares.

It is launching weekend service in Boston, Brooklyn and Chicago. Previously, the company started operations in San Francisco, then expanded to Seattle, Los Angeles, Philadelphia and Austin.

But those last two cities didn’t go too smoothly. In Philadelphia, local authorities conducted a sting and impounded the cars of SideCar drivers.

In Austin, the transportation authority declared ride-sharing was illegal, so SideCar filed a lawsuit against the city a week ago, and made all rides free for now.

Free rides were an easy non-sell during SXSW, with more than 20,000 requested during the Interactive (a.k.a. technology) portion of the festival. (Obviously, not all of those were fulfilled. But such is the nature of the system.)

SideCar spokeswoman Margaret Ryan said of the Austin situation via email, “We’ve since had productive meetings with city officials, many of which are pro-rideshare. We’re hoping to have resolution so we can go back to operating as usual soon.”

Meanwhile, San Francisco-based SideCar is still in discussions with regulators in its home market, where competitors Uber and Lyft have already settled with the California Public Utilities Commission, but SideCar had resisted terms that limited an open interpretation of ride-sharing.

In Boston, Brooklyn and Chicago, SideCar will be available from 5 pm to 3 am on weekend nights until it reaches critical mass.

The company had also said last month that it was recruiting drivers in Washington, D.C., for launch this year.

SideCar raised $10 million in Series A funding last year from investors including Lightspeed Venture Partners and Google Ventures.

Many of them, of course, have also faced cease-and-desist orders or other obstacles from local governments that have expressed concern about liability — and legality.

So, Lyft, probably best known for the giant, hot-pink mustache emblem that drivers slap on their cars, has come up with a SXSW stunt that gets them a little bit of attention without getting into legal hot water in Austin: Free Lyft piggyback rides.

The startup has dispatched around 20 ride-givers — some of them semiprofessional rugby players — to give conference-goers a literal lift around the town.

If you’re not lucky enough to run into one of these pink-mustache-wearing men on the street, as I did today, you can request a Lyft piggyback ride as a temporary option from within the Lyft mobile app. (The full version of the Lyft mobile app, which connects you with real-people drivers willing to use their own cars to give rides, is currently only operating in San Francisco and Los Angeles.)

John Zimmer, co-founder and COO of Zimride, the company behind Lyft, says the piggyback rides were mostly just about having a little bit of fun in Texas.

Lyft isn’t the only one getting creative in Austin, where taxis, pedicabs, and limousines are tightly regulated. SideCar is making all rides free during the fest, and Uber, which primarily hooks users up with town car service, is offering pedicab rides around the city.

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Today, SideCar is making its next outpost clear, with the announcement that it is acquiring the assets of another, similar, company called Heyride, which is based in Austin, Texas, and had only launched there so far.

The deal is well timed for SXSW, the annual Austin-based conference/festival/boondoggle that has become an early-adopter petri dish and PR machine for mobile apps.

Ride-sharing in particular seems a perfect fit for overcrowded Austin in early March, where on-the-fly logistics are a constant issue.

Back home in California, Lyft settled its differences with local authorities late last month — as did Uber, which said it was thinking of adding ride-sharing to its existing licensed driver system.

SideCar, however, didn’t settle. SideCar CEO Sunil Paul declined to elaborate on what exactly happened, but said his company was unwilling to concede to the ride-share terms the California Public Utilities Commission set for the other two startups.

SideCar plans to launch in Los Angeles, Philadelphia and Austin this week, and soon in Chicago, New York, Boston and Washington, D.C.

Lyft and SideCar (and Uber even more so) have significant venture backing, despite their ongoing regulatory troubles. SideCar recently raised $10 million from Lightspeed Venture Partners and Google Ventures, while Lyft/Zimride raised $15 million led by Founders Fund.

Flywheel, formerly known as Cabulous, helps users hail and pay for rides. It partners with taxi fleets to use their existing systems, as well as individual drivers. It currently works with 5,000 drivers in 2,000 cabs across the U.S.

Today the company is changing its name (to be more inclusive as it expands to other types of transportation and other countries) and relaunching its iPhone and Android apps to include “intelligent adaptation to driver and consumer behavior,” as CEO Steve Humphreys described it.

The new apps include features that allow riders and drivers to call each other while shielding their phone numbers from each other, charging automated cancellation fees based on how far a cab has already travelled to pick up a passenger, and dropping unreliable drivers from being displayed.

There are four million taxi rides per day in the United States, said Humphreys, citing the Taxicab, Limousine and Paratransit Association. However, across the country taxis are 47 percent utilized.

Flywheel’s premise is to take advantage of all that existing infrastructure while making it more efficient. Versus black car services like Uber or peer-to-peer ride-sharing services like Lyft, which often court controversy, Flywheel is actually rather conservative. All it does is add a little smartphone magic to what’s already there.

Unlike many of its competitors, Flywheel extracts itself from the payment process, by linking taxi meters directly to its app and charging a flat $0.60 fee for mobile payments.

Humphreys argued that his approach — which also involves a team based in San Francisco conducting business remotely, rather than setting up local operations in every city — makes the most sense.

“You can grow much faster working with the cars because we’re able to work with all the regulatory regimes,” he said. “We’re not going to have all of these speedbumps coming up on the regulator side around safety, accessibility and fairness.”

Still, Flywheel faces its own uphill battles against brand recognition for existing taxi companies, more famous start-ups, and the friction of changing its own name.

Humphreys said his company plans to spend some of its $8 million Series A round (raised earlier this year from investors including RockPort and Shasta Ventures) on branding and marketing. First up, he said, 150 cabs in San Francisco will be topped with big ads for the Flywheel services they support.

If that’s the case, Uber is the current badge leader, racking up a citation from the California Public Utilities Commission and a class action lawsuit by San Francisco taxi drivers to add to its hefty pile of local disputes.

Ride-sharing services SideCar and Lyft confirmed they’d also been cited by the PUC yesterday to the tune of $20,000. Lyft COO John Zimmer said his company would appeal the citation and described it as a chance to accelerate a conversation about modernizing transportation laws. SideCar CEO Sunil Paul asked users to sign a petition supporting his company and urged them to “Ride on!”

Ethan Eyler

There are lots of interesting things about Lyft — it’s a quick-growing example of “collaborative consumption,” where people pool their time and resources; it’s facing regulatory challenges as it takes on the incumbent taxi system – but let’s pause on those pink mustaches for a second. Where did they come from, and who came up with the idea?

That would be Ethan Eyler, a San Francisco entrepreneur who dreamed up the idea of the “Carstache” in 2010, and quit a marketing job at Tencent to make his own fuzzy hood ornaments full-time.

Eyler comes off as a grown-up frat dude (which he is; he graduated with an English degree from Bucknell in 2003) who’s living the dream of making his own wacky ideas come to life, for a profit.

Carstache’s largest single customer is Lyft, though, according to Eyler, more than half his business is from holiday “white elephant” gifts. Eyler said the company has a “six-figure business” selling mustaches of all different colors for about $40 each, with most manufacturing now done in China.

A bag of Carstaches at Lyft headquarters

I’d been wondering whether the Lyft car ornaments would start looking tired and dirty once winter hits, but Eyler insisted that the Carstaches keep their color for a year. If it rains, he said, more driving is nature’s blowdryer.

Two downsides of Carstaches that Eyler would admit to: Per his insurance broker’s advice, they come with a warning not to be used on the freeway (though many people disregard this), and they do tend to get stolen.

But Carstache isn’t Eyler’s only crazy idea. More recently he has been working on a start-up called RunWilder, which creates mobile games and online video series around comedic characters. He has raised $350,000, and hired people from LucasArts and Maker Studios to help make this all come to life.

Ozgood

RunWilder’s first product is an iOS app with a live-action interactive puppet named Ozgood — users can feed beer and burgers to him until he barfs.

Ozgood is totally tasteless but actually kind of funny — it’s like Talking Tom for adults — but Eyler said there were too many limitations in making a 21+ app. Ozgood was rejected by Apple four times until RunWilder removed text references to beer, and it doesn’t stand a chance of getting featured in the App Store.

So, while the Ozgood puppet is headed back to filming for a Web series, RunWilder is on to its next game, this time for kids. Burt Destruction is a side-scrolling game that stars an 11-year-old kid, his “Rambo/Hulk hybrid” alter ego, and his sidekick Bigfoot, as they fight off yetis, robot mastadons and leprechauns. The mobile game and accompanying Web series are due in January.

What’s next for Carstache? Eyler said he has recently been dreaming about making a mullet for pickup trucks.

SideCar CEO Sunil Paul admitted that it was “more challenging” to get venture capitalists onboard, given that SideCar was sent a cease-and-desist letter by the California Public Utilities Commission in August, along with competitors Lyft and Tickengo. He said that VCs were also concerned about there being quite so much competition in the taxi 2.0 space.

So why did the VCs pony up the money? Because Paul assured them that his service is differentiated and was carefully built within existing laws — something he personally is very familiar with, due to his work around legalizing peer-to-peer car-sharing in California. It also doesn’t hurt that SideCar recently acquired a patent for transportation routing that Paul received in 2002.

SideCar got the cease-and-desist order from the PUC on Aug. 15, saying that it lacked the necessary charter-party carrier permits. Paul told AllThingsD that the letter came as a surprise, arriving less than a week before a scheduled introductory meeting with a PUC supervisor.

Since then, SideCar has kept its drivers on the road, while trying to explain itself to the PUC. Paul maintains that his company doesn’t need a charter-party carrier permit because those are for limo services, which isn’t what SideCar offers.

In San Francisco, SideCar competes directly with Lyft, which equips drivers’ cars with large, fuzzy, pink mustaches that raise visibility. Lyft — which also received a cease-and-desist order — has yet to release growth numbers, but SideCar now says it has facilitated more than 50,000 rides since February (most of them since its public launch in June).

Paul said that SideCar expects to expand to U.S. markets beyond San Francisco shortly, and ultimately beyond just ride-sharing. “We’re out to build something that makes it possible for you to not have to own your own car, and this is the beginning of a series of innovations that will make that possible,” he said.

The firms have continued to operate their services since then, but word of some of the letters just came out in a San Francisco Chronicle story.

The SideCar app

Lyft, SideCar and Tickengo make mobile apps that connect drivers to passengers who exchange donations for rides. The donations are only suggested, but riders who don’t make them risk lower ratings from the drivers. The PUC told the companies they lacked the necessary charter party carrier permits to operate.

“Our view is we are not offering a transportation charter service, so there’s nothing to cease-and-desist,” said SideCar CEO Sunil Paul in an interview this morning.

“They seem to have an attitude where they lump Uber, SideCar and other smartphone companies in one, without looking at the specific details of how we operate,” he added. (Indeed, Uber received a similar letter two years ago, and also continues to operate.)

Lyft COO John Zimmer told a similar story. “It was clear that they didn’t have an understanding of what we do. We designed the service to be in full compliance with regulations. We’ve been in conversations with them, and they admitted to the fact that current regulations weren’t written with this in mind.”

Both Paul and Zimmer said they have been in ongoing discussions with the PUC since then they received the letters in August.

While the talks have continued, the PUC has not done anything to enforce the orders. ”We understand that what’s likely to happen next is a public investigation,” Paul said.

The PUC’s general counsel, Frank Lindh, told the Chronicle that his concerns include liability in the case of an accident, and commercial competition for existing regulated taxi systems.

SideCar, Tickengo and Lyft clearly knew their legality was going to be questioned from the start.

Lyft cars have signature hot-pink mustaches.

“Everything we’ve done has gone above and beyond what any alternative transportation, what taxis or limos, requires. We’ve been very careful from the beginning,” said Zimmer.

“There’s certain entrenched interests that are not happy, and they have a lot of sway to try to put this existing innovation back in the bottle. But smartphones are not getting any dumber,” Paul said. “We’re out to build something that makes it possible for you to not have to own your own car, and this is the beginning of a series of innovations that will make that possible.”

Zimmer had a similar message. “The important thing is we need to be able to innovate. There are serious problems with transporation in this city. Why would these regulators try to stunt innovation during a tough economy?”

Paul noted that he is intimately familiar with California transportation law from his successful efforts to pass AB 1871, which made car-sharing services like Getaround and RelayRides legal.

He pointed to two specific SideCar features that were built with compliance in mind: Passengers cannot request a ride without specifying where they are headed; and the suggested donation is based on an automatically calculated peer-based average, not an amount set by SideCar. Plus, said Paul, over the lifetime of the SideCar service (just about the last six months), about 1 percent of passenger trips have been given for free.

Meanwhile, Zimmer noted, Lyft has secured a first-of-its-kind $1 million excess liability insurance policy for its service.

Both SideCar and Lyft have put up blog posts on the matter.

Update: Tickengo co-founder Geoff Mathieux called and confirmed his company received a cease-and-desist in September. He contended that Tickengo had been unfairly lumped in with Lyft and SideCar, because those services have much in common with commercial taxi businesses.

Tickengo, by contrast, doesn’t screen or train drivers, doesn’t buy insurance, and actually limits the amount any driver can earn per year to $8,776 (the estimated American cost of car ownership).

“We’re trying to elimate the need for commercial vehicles, so we’re the total opposite,” Mathieux said. “Lyft is taking regular people, yes, but they’re turning them into professional drivers. It’s not disruptive; it’s a yellow cab with a mustache.”

“We’re not all created equal here,” he continued. “You can’t lump all these companies in one bucket. Some are legal and some are not. They’re BS-ing their way into peer-to-peer, and it’s not peer-to-peer. Frankly, I think the PUC has a point.”

Update 2: A representative for the PUC replied to questions we sent via email.

What are the core concerns about how these services operate, and what regulations do they violate?

Companies must obtain charter party carrier permits, which a company receives after the CPUC ensures that its drivers are properly licensed and is insured to carry commercial passengers.

What happens, going forward? It doesn’t appear that these services are stopping. What’s next?

The law provides various enforcement tools, fines, filing criminal complaints and possible imprisonment, vehicle(s) impoundment, coordinating with other law enforcement agencies, etc.

It was way less weird than I expected.

The guy who gave me the ride was an incredibly friendly fellow named John Robertson, who was driving for a start-up called SideCar, which has built an alternative to taxis, with cars driven by regular people and hailed using smartphone apps. SideCar launches to the public today in the San Francisco Bay Area.

At a SideCar employee’s suggestion — I should admit that my Friday afternoon meeting had actually been at SideCar’s office — I sat in the front seat of Robertson’s car and chatted him up.

Robertson told me he recently retired after 30 years as a project manager at UPS, and quickly got bored. He now generally drives five or six hours per morning with SideCar, and golfs in the afternoon.

Robertson said he lives in the East Bay, and has used the driving as a chance to get to know San Francisco better. He only makes $80 or so per session — which isn’t great, minus the cost of gas — but he doesn’t do it for the money, but rather because he believes in what SideCar is doing.

And Robertson meets all sorts of interesting people — during the beta period, lots of Twitter and Google employees, where word about SideCar apparently spread quickly through their SF offices.

SideCar is run by Sunil Paul, the serial entrepreneur and investor behind companies like Brightmail, who in recent years has been exploring cleantech and now the “cleanweb.” Paul first worked on getting California legislation changed to allow car sharing, and tested a start-up in that space called Spride, but then decided the more transformative and potentially lucrative opportunity was around sharing rides within an online community rather than borrowing people’s cars.

If you ask Paul, the idea for a ride-sharing start-up first occurred to him in 1999 — and he actually received a patent on some aspects of it in 2002.

After sitting on the idea for some 10 years, Paul recently invested and became CEO of a University of Michigan transportation research spinoff called Shepherd Intelligent Systems — now SideCar.

SideCar has been in testing since February, with more than 10,000 rides to date. In San Francisco, SideCar isn’t nearly as fast as Uber, but rides can be booked in “minutes to 10s of minutes,” as Paul described it.

As seems to happen with many timely ideas, there is a direct SideCar competitor that also just launched — it’s called Lyft, and is made by the start-up Zimride. I tried Lyft yesterday, and from a user’s perspective, it seems almost identical.

There’s one key difference between SideCar and the competition, at least according to Paul. After all the work he did with car sharing, he knows the regulations around collaborative consumption and transportation backward and forward, and SideCar’s payment system is apparently more strictly built to abide by existing laws.

The way it works is that SideCar automatically and dynamically computes a suggested payment that averages what other people have paid for the same kind of ride. This sidesteps the company and the driver setting a price for the ride, in order to avoid commercial vehicle restrictions. SideCar takes a 20 percent cut.

Users don’t have to pay for the ride, but if they don’t, drivers are unlikely to give them a good rating, and they’re less likely to be picked up the next time they request a ride. (Lyft has the same policy.)

Of hinging his company’s business model on an optional donation, Paul said, “The capitalist in me is scared silly of that idea, but the human being says you can trust people.”

Another nice feature of SideCar is an easy way for riders to share their ETA with a friend and send them a live online map of their progress in the car. This looks a lot like Glympse, and helps people reassure themselves that someone knows where they are while they’re in a stranger’s car.

Paul is being somewhat secretive, even as SideCar opens to the public, and won’t disclose how much funding he’s raised or how many employees he has. He did give me a long list of investors, which includes his own Spring Ventures, Huron River Ventures, SV Angel, Lerer Ventures, First Step Fund, Jeff Clarke, Lisa Gansky, Robert Goldberg, Jared Kopf, Konstantin Othmer, Mark Pincus, Martin Roscheisen, Josh Silverman and Thomas Varghese.

With an interface like Uber, Lyft users will be able to find nearby drivers and hop in for a ride, paying a suggested donation that’s approximately 30 percent less than a cab fare.

Drivers will be vetted by Lyft, and both riders and drivers authenticate via Facebook. Lyft is only in San Francisco and on iPhone for now, where there’s also a competing service called SideCar in beta testing.

Asked about the licensing and insurance issues that come with effectively turning regular cars into taxis, Zimride COO John Zimmer said, “I’m sure people will get upset about more competition. But our understanding is that when it’s ride-sharing, you can use your personal insurance policy. As for regulation, a lot of state laws are supportive of carpooling and ride-sharing and want to make that work.”